Fels comments slapped down in ‘loyalty tax’ tussle
NSW Emergency Services Levy Insurance Monitor Allan Fels says all home policy renewals from next month must include the previous year’s premium, a move it claims will help consumers overcome what it calls a “loyalty tax”.
But the comments by Professor Fels have been heavily criticised by the Insurance Council of Australia (ICA), which rejects his belief that insurers impose a virtual tax on loyal customers by not telling them what they paid in the previous year.
“People should be able to see any price increases easily, particularly given the practice by some insurers of charging higher premiums for renewing customers than for new ones,” he said.
Under the rule imposed on insurers by the NSW Government from July 1, “consumers will be more likely to notice any increases, question the price with their insurer, and switch provider if they are unhappy with the response”.
But ICA told insuranceNEWS.com.au today that the new NSW rule pre-empts national action on the issue through its upcoming code of practice, and discounts for new customers “is competition in action”.
Insurers across Australia have already committed to including the previous year’s premium in renewals for home and contents and motor vehicle insurance “as part of the revised industry code, which is reaching finalisation”.
“Several [insurers] already provide this comparison, ahead of the July 1 implementation for NSW,” a spokesman said.
And ICA suggested Professor Fels should confine his comments to his job, which is overseeing insurers’ actions during the aborted exercise to end the state’s emergency services levy.
It says his concerns about the cost of insurance “should focus on removal of the unfair and inequitable emergency services levy”.